Mark Zuckerberg Is Burning Money at an Uneven Pace in the History of Tech …
... even if it means pushing Meta towards bankruptcy.
Facebook, oops Meta, has just announced at the end of September 2022 that the company will start to reduce its hiring and investments. For the first time since its creation in 2004, Facebook will proceed to a staff freeze. In addition, the company will restructure some teams to cut costs and shift priorities. “Meta will be slightly smaller in 2023,” says CEO Mark Zuckerberg.
The announcement isn't entirely unexpected. Meta already announced last week that it would partially reduce its responsible innovation team (people who try to keep the digital world somewhat on track), now that Meta's stock price has lost more than 60 percent of its value in recent months and second-quarter 2022 earnings were more than 36 percent lower than the previous year.
Zuckerberg, who has personally lost more than $70 billion in theoretical wealth since the beginning of 2022, seems determined to impose his virtual world on us.
In the meantime, he is burning money at a rate unmatched in the history of technology.
Over the next few years, Mark Zuckerberg plans to inject $70 billion into the metaverse. An investment whose ROI worries investors greatly, since it is more than random and confused to date.
Since Mark Zuckerberg intends to revolutionize the world of the future with his metaverse, the American website The Information had fun comparing the investments that Meta intends to make in R&D in the coming years with other investments that wanted to change the world in their time, such as the iPhone, Android, or self-driving cars.
Let's start with the iPhone for which Apple has invested 3.4 billion dollars in R&D for a return on investment of 1,600 billion dollars to date! As for Android, Google has invested a few hundred million dollars for a return on investment of several tens of billions of dollars to date.
We can see that giants like Apple and Google have been parsimonious in their R&D investments with the iPhone and Android, with spectacular results.
From Meta's side, we have the feeling that Mark Zuckerberg is in a double-or-nothing situation. He is ready to sacrifice everything for the metaverse, even if it means the complete collapse of his company. Something that is not to the taste of investors!
Regarding R&D investments in the field of autonomous cars, we are around 27 billion dollars in total for the 6 biggest developers of this type of vehicle: Waymo from Alphabet, Cruise from GM, Zoox from Amazon, Argo AI, Mototional, and Apple. The returns in this area remain unclear and minimal so far.
However, this is still two and a half times less than what Mark Zuckerberg plans to bet on the metaverse in the coming years. It's easy to see why more and more prominent investors are starting to grumble that it's time for the Facebook founder to hand over.
Because even if the metaverse ends up being the wild success that Mark Zuckerberg believes it will be, there's nothing to say that the current timing is right. But we know that in tech, timing is everything. Too many companies have ended up going bankrupt because they presented their revolutionary idea too early.
Let's hope for Meta and its investors that this is not the case this time ...
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